75.
In coming to an assessment, competent authorities will take into consideration the ability of the ECAI to produce robust credit assessments, based on quantitative methods and a proven data track record.
76.
Competent authorities will also take account of market indications of the ECAI's standing. For example, strong market acceptance and the existence of a long track record may be viewed as indications that the market has a favourable opinion of the ECAI's methodology and credit assessments. As indicated in paragraphs 112 to 116, the relevant threshold for eligibility is that the assessments are recognised as credible and reliable by market users. Stronger market acceptance is not a prerequisite, but rather a factor which is relevant in determining the intensity of assessment of other factors.
77.
In addition, the extent to which an ECAI adheres to a code of conduct which is in line with market standards and internationally recognised principles such as the IOSCO Code of Conduct Fundamentals for Credit Rating Agencies and the public disclosure of such a code may contribute to satisfying competent authorities that the ECAI conforms to certain CRD criteria, such as the independence criterion. This could reduce the amount of analysis that the competent authorities themselves need to undertake in order to verify the ECAI's eligibility in these areas.
78.
The implementation of a recognition regime may be perceived as creating barriers to entry in the market for external credit assessments. While seeking to avoid any unnecessary interference with the market, competent authorities recognise that their primary objective is the prudential need to identify which ECAIs are eligible for risk weighting purposes.
The technical criteria 13 1.
Methodology 1.1. Objectivity
Competent authorities shall verify that the methodology for assigning credit assessments is rigorous, systematic, continuous, and subject to validation based on historical experience. 79.
The purpose of this criterion is to ensure that an ECAI’s credit assessment methodology produces an informed and wellfounded opinion on the creditworthiness of the rated entities, and that its credit assessments are based on all information deemed relevant and available at the time they are issued.
80.
In meeting this criterion, an ECAI will need to demonstrate that its methodology incorporates factors known to be relevant in determining an entity's creditworthiness. This demonstration should, to the fullest extent possible, be supported by statistical evidence that the methodology has produced accurate credit assessments in the past.
13
The boxed text represents the technical criteria set out in Annexes VI and IX of the CRD. When there are differences between the two Annexes, they are explicitly mentioned.
17